The Center Left and Globalization

After promising to reform both France and the European Union, President Emmanuel Macron is now struggling to reclaim the public's confidence and prove that he is not the "President of the Rich." By pursuing a business-friendly reform agenda, Macron has fallen into a trap that center-left reformers everywhere seem incapable of avoiding.

WASHINGTON, DC – Popular uprisings across France are threatening to shatter the hope that so many had placed in French President Emmanuel Macron after his election in May 2017. With his party, La République En Marche !, having secured an absolute parliamentary majority, Macron promised to pursue difficult reforms not just in France, but also within the European Union. But now he is facing the biggest crisis of his presidency.

Revitalization of the EU has long depended on a strong French leader capable of overhauling the country’s economy. Before the proposed fuel tax that brought the Yellow Vests into the streets last month, Macron had managed to overcome opposition to a series of labor-market reforms. Though politically difficult, the reforms were necessary to bring the budget deficit below 3% of GDP, in accordance with EU rules, and modernize France’s generous social-security system in the face of disruptive new technologies.

As I (Derviş) argued in May, the traditional center right and center left are too deeply embedded in European political life to be erased by an upstart political movement like Macron’s. So, for Macron to retain his popularity, he must cooperate with or somehow subsume either the center right or the center left.

In the first round of the 2017 presidential election, two-thirds of France’s center-left electorate voted for Macron. Still, he had two avenues open to him when he took office. The first was to adopt the center right’s agenda and pursue labor-market, tax, and investment policies that would “adapt” France to “capitalist” globalization. Somewhat surprisingly, this is the route he initially chose, quickly becoming the darling of the business-oriented international press.

The other avenue would have required Macron to build on a pre-existing but vague conception of left-wing internationalism. In practice, that would mean pursuing policies to help the middle class, while updating an obsolete center-left program to account for the effects of disruptive technologies and business models. As the economist Dani Rodrik has long argued, more globalization requires a larger state, in order to compensate those displaced by free trade, capital-account liberalization, and so forth. Without compensation, there is no guarantee that globalization will maintain broad public acceptance.

This is not to say France can do without center-right reforms. The budget absolutely does matter, and reducing deficits will always require unpopular spending cuts and tax increases. Likewise, the French labor market tends to benefit insiders, thus making it harder for everyone else to find a job. And the state-owned rail system was in desperate need of an overhaul. In his first year and a half in office, Macron started to tackle these problems, and managed to deliver a budget in line with EU deficit rules.

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The problem is that in pursuing these reforms, Macron abandoned his core center-left constituency. Step by step, his reforms seemed consistently to benefit the rich. And so, when it was announced that his government would increase the tax on diesel fuel, middle- and working-class commuters took to the streets. With polls showing that around 70% of the French support the Yellow Vest protesters, Macron was forced to retreat.

Was there a full-fledged center-left alternative that Macron could have pursued instead? The short answer is no. Reformers concerned primarily with income and wealth inequality, environmental sustainability, and democracy are still trying to figure out what a left-wing approach to globalization should look like. Unlike neoliberalism, which is clear in its policy prescriptions, a center-left approach must offer an entirely new social contract to address the effects of technological disruption, deepening globalization, and climate change.

More to the point, the left must understand that it cannot win this battle by focusing on domestic policymaking alone. Technological innovations and the global networks that facilitate their diffusion cannot be reversed or unraveled; at best, they can be slowed down. But those who resist change will end up less competitive in the economy of the future. The only real choice, then, is to move ahead, but also with social-welfare reforms to protect every citizen and to compensate the losers. Sufficient resources must also be available to facilitate learning and new careers.

Needless to say, a new center-left social contract will require substantial public resources, wisely deployed, often by local governments. At the same time, governments will have to cooperate to prevent international blackmail in the form of tax and regulatory arbitrage. Unmanaged globalization encourages capital and high-income earners to flock to low-tax jurisdictions, depriving governments of the revenues needed to maintain social-security systems. Fortunately, the G20 has begun to recognize this as a problem. But much more work needs to be done to adapt tax, health-care, and education systems to a global economy in which tech giants are developing new forms of monopoly power.

These efforts will require a lot of new thinking. For their part, center-left leaders must start exploring ideas for radical and innovative new governance platforms at both the national and international levels. They could do worse than to read the historian Yuval Noah Harari’s new book, 21 Lessons for the 21st Century, which offers a blueprint for addressing collective challenges like climate change and nuclear proliferation.

The world is undergoing a technological revolution that has the potential to benefit us all. But much will depend on whether there is leadership to manage the coming disruptions. The alternative is to risk updated versions of the twentieth century’s political catastrophes and world wars. Either way, Macron is a bellwether, because what happens in France will not stay in France.

Caroline Conroy is a senior research analyst at the Brookings Institution.

With French President Emmanuel Macron’s government under siege by mass street rallies, reformists’ prospects in next year’s European Parliament election look dimmer than ever. And as protesters hit the streets in Brussels and elsewhere as well, 2019 is shaping up to be a make-or-break year for the European Union.

Kemal Derviş and Caroline Conroy say Emmanuel Macron is facing “the biggest crisis of his presidency”. When the ex-banker came to office over a year ago, he adopted a centre right’s agenda that would “adapt” France to “capitalist” globalisation. After the outbreak of street protests, he gave in by announcing a number of measures to appease the protesters. Most of all he was eager not to be called “president of the rich.” Critics saw it as a humiliating climbdown. The authors maintain “the traditional center right and center left are too deeply embedded in European political life to be erased by an upstart political movement like Macron’s.” Now that his popularity has hit new low, it is time for him to “build on a pre-existing but vague conception of left-wing internationalism.....pursuing policies to help the middle class, while updating an obsolete center-left program to account for the effects of disruptive technologies and business models.” There has been a debate on the demise of the “centre left” and the rise of the “nationalist right”, but the terms “left” and “right” should not be relevant, because sound politics requires pragmatism and flexibility. The term “left” seems to imply support for the ideology of green, the social liberal and global order. The term “right” denotes conservative, nationalistic views, with resistance to the global capitalist plans for free movement of commodities and labour. Regardless of political inclination, there are supporters of the left and right who reject an ideology dedicated to the obsession with perpetual growth in a finite world in the interest of maximising the wealth of a tiny global elite. They say the extreme poverty that used to be confined to the third world has come to haunt the poor in developed countries. It explains why angry working-class people in the affluent West have turned to right-wing populism. With reference to Dani Rodrik, “more globalization requires a larger state, in order to compensate those displaced by free trade, capital-account liberalization, and so forth. Without compensation, there is no guarantee that globalization will maintain broad public acceptance.” The authors say, it does not mean that France must ditch “center-right reforms. The budget absolutely does matter, and reducing deficits will always require unpopular spending cuts and tax increases.” In this regard, Macron could still forge labour-market reforms, bring “the budget deficit below 3% of GDP, in accordance with EU rules, and modernize France’s generous social-security system in the face of disruptive new technologies.” Yet some version of socialism or eco-socialism could make his agenda appealing to liberal conservatives, if policies were not so confused by the misuse of the term “left” for socialism, and globalism does not have to mean end destination of globalised poverty. During Macron’s campaign his message signalled “centrism” – neither left nor right. The authors suggest, he should look beyond “income and wealth inequality, environmental sustainability,” and try to figure out “ what a left-wing approach to globalization should look like. Unlike neoliberalism, which is clear in its policy prescriptions, a center-left approach must offer an entirely new social contract to address the effects of technological disruption, deepening globalization, and climate change.” Indeed, investments in infrastructure, research and human resources will increase national productivity growth in a world undergoing a “technological revolution.” Living standards can be improved not just through redistribution but through innovations and a new generation of eco-friendly industries. Good leadership is required to manage institutions that foster a greater sense of economic security and good governance. When people and communities have more control of their lives, there will be no return to the last century’s “political catastrophes and world wars.”

Technological innovations can be slowed down, and even stopped. For example we do have the technology to clone ourselves in order to have a true body double from which to harvest organs to replace our organs if they happen to fail e.g. heart, lungs, liver, limbs, articulations. However, for various reasons and thanks to some level of international cooperation this technologies are not being developed except very secretly and for the very few if at all.Similarly technological innovations in the field of gas chambers designed for homo sapiens using Zyklon B have largely stalled since the end of WW2. Consequently it might be useful and realistic to at least render ourselves able to imagine a post-technological world, in which technological innovation is not central, nor devoted to private profits, nor the engine of human endeavour.

Rich World (G7) economies face a growing problem with in-work poverty. As the article suggests this is partly due to Global labour market arbitrage, but also due to increasing automation. Both factors weigh heavily on pay and conditions for low skilled workers as businesses struggle to remain Globally competitive. Even significant increases in legal hourly minimum wage levels have been circumvented by the move to zero hours contracts and the GIG economy which give workers even less income security.

Governments therefore face a contradiction between the need to make work pay a liveable wage, and the increasing pressures on business to remain Globally competitive. The solutions, focused on Basic Income, affordable housing, and skills training all require significant government intervention, which flies in the face of 40 years of neo-liberal market led policies, and financial market expectations.

Yet without these deep reforms all countries must choose between a path that will either make business labour costs uncompetitive, or result in growing worker poverty, and voter anger, in some of the World's richest economies.

When has the world NOT been undergoing a technological revolution? The 'Center Left', in the Fifties and Sixties, did believe that the State could better manage this revolution- for example, by promoting Mergers or even Nationalizing major employers so as to secure Economies of scale and scope- while mitigating structural unemployment through Manpower and Regional Policy. This policy failed completely and was associated with 'stagflation'.

The Center Left had lost any semblance of an economic ideology by the time Clinton made his U Turn and 'tax and spend' politics was buried because the electorate no longer sympathised with organised labour.

The yellow vests want lower taxes and better public services. They aren't opposing labour market reform or greatly exercised over the minimum wage. This is perfectly reasonable. A lot of stuff Governments spend money on is beneficial to rich bien pensant urban populations but useless or harmful for everybody else.

It is foolish to think that Academics can say anything useful at this late stage of the game. Cutting taxes and enforcing immigration laws is all that can or ought to be done.

"As the economist Dani Rodrik has long argued, more globalization requires a larger state, in order to compensate those displaced by free trade, capital-account liberalization, and so forth. Without compensation, there is no guarantee that globalization will maintain broad public acceptance."

Globalization does not -have- "broad public acceptance." It doesn't have any "acceptance" at all. People who are, as you euphemistically say, "displaced" – by euphemisms like "free trade," "capital account liberalization," and so on – know perfectly well that they are being robbed by their own government, and by the "para-government" to which some of them foolishly, but (as it will turn out) "briefly," subscribed.

Immigration policies exist for a reason, and the most basic reason is to protect the legal rights of both immigrants and citizens alike from the wretched abuses that would otherwise inevitably occur. (And, which now do occur, in the name of "globalism.")

"Globalization" is nothing more than indentured servitude and slavery – the quest for the worker who cannot say "no." It simply affirms the reason why we invented "sovereign nations" in the first place. It is an intrinsically flawed social nirvana that plays people and nations against one another in the name of cooperation ... and ordinary people see this clearly.

"Brexit" is not an aberration – other nations will very quickly follow – and it is easy to understand why EU now wants an Army of its own so that it can wage The Next European War against those who dare try to leave its clutches. But, leave they will. Without bloodshed – or, through it. Your choice.

Globalisation nowadays means that the american and european taxpayer is carrying the whole world on his back. Everyone tries to suck out some wealth and steal jobs from western countries either through outsourcing, exports or mass immigration, aka offloading their surplus population on US/Europe. But there is a problem. After carrying all the costs of globalization for decades, the western taxpayer is now broke. The article claims that globalisation is inevitable. I beg to differ. If something cant hold, it wont. As Salvini says, the only thing inevitable is death. So unless the costs of globalisation are spread more evenly across the globe, the globalisation will die a painful death. Time is ticking ....

Are you SERIOUSLY suggesting that the guy who wants to make it easier to fire people is "centre left"? He's as neoliberal as it gets. No socialism or social democracy about this guy at all. How can anyone make this mistake?

Could not disagree more. There is no way that you could describe Thatcher as "center" right. Her idols were Hayek, Friedman and Enoch Powell. https://www.margaretthatcher.org/archive/Hayek.aspMacron has more in common with Ron Paul than anyone on the "center" right and there is nothing vaguely left about his programme.Thatcher herself was the daughter of a shopkeeper and her whole ethos was about emancipating the working classes from the unions as well as from dead-end jobs. She was scorned and ridiculed by the Old Tories and High Tories as she was not elite. It's only once they saw that she was gathering huge support among the working classes that she got their support.So strong was the effect of Thatcherism that both other major UK parties (Labour & Liberal Democrats) lurched to the economic right to try to compete. This ended up with Labour (nominally a socialist party) promoting free-market Hayek-style ideologies and cutting taxes. Nothing "center left" about that.The revolt on the right is all about people posing as libertarians but hating what libertarianism actually manifests as. They hail Ayn Rand but hate politicians who follow her prescription, conveniently (and mistakenly) relabelling them as "liberal" or "neoliberal".It's a mess of confused and incorrectly used labels, basically. At its core, the word "liberal" has become so misused that it can mean anything from communist (USA) to centerist (UK) and anarcho-libertarian (Italy, Australia). Its sibling "neoliberal" has also followed the same fate, and is used as a catch-all term for everything people don't like.

Yes, although maybe a simpler interpretation is that center-anything politics has shifted so far toward pro-big-business, that majorities are available only by forcing a binary choice of a "contemporary centrist" vs a "homophobic nationalist".

This is the proven way to defend the neoliberal system. The component speps are:

1. Help the contemporary centrist defeat the leftist in preliminary elections2. Help the homophobic nationalist defeat the center-right in preliminary elections3. Make sure the contemporary centrist defeats the homophobic nationalist

The point of concern is that step (3) is unreliable.

What is left unsaid is that more than a few influential people and institutions prefer that risk (considering its impact likely to be temporary, confined to social issues, and thereby mostly falling on "others") to the risk of a mirror image situation with a leftist winning (which would "undermine confidence in business", i.e. redistribute wealth downward).

The Center Left made a devil's bargain with the Economic Right 40+ years and is in way to deep to get out now. The Left be it Labour in the UK, The Democrats in the US, The SPD in Germany surrendered on Economic issues it allowed Global Labor Arbitrage, The destruction of effective Unions, The wholesale shipping of industry to the 3rd world. In return for which the "Left" got it's way on social issues, LGBT, Identity politics and so forth. The left didn't realize how bad the results of the Economic Right was going to be. Or didn't care take your choice? At this point however, the results are irreversible? After all the Left would have to admit to making such a bad bargain and it can't and won't admit to the mistake. Unlikely at best. And two the results at the hourly wage level of the Economy would take another 40 years to reverse. I don't think the losers in this bargain have the patience to wait that long just to get back to where they were forty years ago. Thus the attraction of the radicals of the left and the right.

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